Carriers all over Europe, reeling from the events in September, are looking at new business plans just to remain afloat

Europe's airline industry continues to reel under the damage inflicted by the US terrorist attacks, with major carriers such as Alitalia, Swissair, Sabena and Scandinavian Airlines (SAS) revealing plans aimed at cutting losses and, in one case, staving off collapse.

Belgium's airline industry appears to face the most serious question marks over survival. As Flight International went to press, state-owned carrier Sabena was subject to a pilots strike which was threatening to finally overwhelm the ailing finances of the airline.

Sabena chief executive Christoph Müller warned the strike would lead to the airline's bankruptcy. As the strike got underway on 28 September the airline suffered heavy cuts to its European services but managed to keep its long-haul operation intact.

The pilots said their industrial action was in protest against an "unrealistic" business plan and "a planned bankruptcy scenario".

Lengthy negotiations with other unions have hammered out a deal reducing the number of redundancies from the planned 1,400 to around 400, with the government paying for various early retirement schemes. Sabena last week was holding a staff referendum seeking approval for the social aspects of a plan involving capacity reductions, employment cuts and an asset sale.

Before 11 September, Sabena needed Bfr40 billion ($900 million) in new capital to survive. Its shareholders, the Belgian Government and Swissair agreed to provide only Bfr17 billion with the rest having failed to materialise.

Elsewhere in Belgium, charter operator City Bird was fighting for survival after German tour group Thomas Cook tried to opt out of a takeover bid made before 11 September. The Belgium courts subsequently ruled that Thomas Cook was obliged to go ahead. On 28 September creditors, including Boeing Capital, supported a restructuring plan. A decision on the airline's survival is likely this week.

The other major move in Europe is Swissair's decision to merge with its regional subsidiary, Crossair, to form Swiss Air Lines.

Both carriers will retain their individual branding, but will be run as a single company. Crossair chairman André Dose is to assume the helm of Swiss Air Lines, under Swissair chairman Mario Corti.

Fleet details are scant but the airline confirms that a 25% reduction in its Airbus A330 and Boeing MD-11-dominated long-haul fleet will take place by 2004. The fate of an order for nine Airbus A340-600s is unknown.

The Swissair/Crossair fleet and short-haul networks "will be matched and harmonised" with details revealed as the new plan is unveiled in the weeks ahead. Crossair's order for eight A320 family aircraft is described by sources as "pending". Extensive regional jet orders with Embraer are expected to be left largely intact.

Elsewhere in Europe, Alitalia plans L400 billion ($190 million) fleet, route and job cuts to cope with falling traffic. Various services to Asia, the USA and Latin America are being cut. European "regional" routes out of Milan Malpensa will also be suspended .

Six Boeing MD-80s and two MD-11s will be withdrawn from service. The airline will also ground four Boeing 747-200s from 1 November and a further three mid-2002. All orders, options and negotiations on aircraft purchases will be "frozen", says Alitalia. The carrier is awaiting a government response to a request for support.

SAS is cutting capacity by 12% and reducing services in Asia, the USA and Europe. Sixteen aircraft are being retired, including two 767-300ERs and a mixture of MD-90s and McDonnell Douglas DC-9s. Around 1,000 jobs will go.

In the UK, British Airways was last week grounding 747-200s as they arrived back in London. The carrier had earlier announced sweeping cuts to its route network, particularly from London Gatwick.

Source: Flight International